Study: CPG companies might not be converting data into asset
NEW YORK — Consumer packaged goods companies have invested heavily in technology platforms to improve their trade promotion performance but may lack the talent or business proceeds to capitalize on those investments, according to a new study from Accenture.
Accenture’s Perfect Promotion Survey, based on interviews with 350 senior executives at large CPG companies, found that 61% of respondents believe their technology investments have produced a wealth of data that can help improve their trade promotion performance but they lack the talent needed to put the data to its most effective use and boost the return on their analytics investment. In fact, 1-in-5 executives (21%) admit that they trust their intuition more than the available data to make trade promotion-related decisions.
The study also reveals that CPG companies have changed their trade promotion investments since the start of the economic downturn in 2008. According to the study, 71% of CPG companies have increased their trade promotion spending in response to the economic downturn — 23% by more than one. Many executives participating in the study believe the additional investment has delivered additional value: 27% believe their return on investment, or ROI, has increased by more than a quarter since the downturn, while 16% believe that their ROI has declined.
Slightly more than half (53%) believe their company’s trade promotion performance is good, but could be improved. However, 28% believe it to be either “totally ineffective” or in need of significant improvement, and only 19% view their trade promotion performance as industry leading.
“The right approach to trade promotions is to blend leading edge technology with outstanding talent and make better use of predictive analytics and greater process integration across the business,” said Ed Stark, a managing director in Accenture’s Consumer Goods & Services practice. “In many cases, the heroic efforts of individuals in CPG companies can hide many of the failings of their trade promotion efforts, and the successes that are achieved often occur in spite of, not because of, the tools, talent and processes at their disposal.”
According to the survey, most respondents identify predictive analytics as a critical tool for improving trade promotion performance. More than half (54%) view predictive analytics as important or very important for companies seeking improvements in this area, and 56% rated predictive analytics as being very desirable or the most desirable way for their company to improve its trade promotion efforts. However, a significant number (24%) believe predictive analytics has limited importance. “We have detected a strong feeling that companies are not making the most of the data that their technology investments have generated, and, perhaps more worrisome, a large proportion of our survey respondents do not trust the data,” said Alex Kushnir, a managing director in Accenture’s Consumer Goods & Services practice.
Other key findings from the study included:
- The volatile economic climate has encouraged two-thirds (66%) of CPG companies to switch more than one-quarter of their trade promotion spend to digital channels, and 20% expect to shift more than half of their trade promotion dollars to digital channels during 2013.
- 28% identified closer collaboration with retailers as being crucial to improving their trade promotions initiatives.
- 43% of CPG companies believe that greater integration is required between the business functions involved in the trade promotion process.
- 66% would consider outsourcing all or part of their trade promotion process.
- The same proportion (66%) would use outsourced talent to help analyze and help them better understand their data.
- 55% would outsource to help leverage the data they have captured.
Pharmacists praise enactment of Texas bills providing for fair pharmacy audits and pricing transparency
ALEXANDRIA, Va. — The National Community Pharmacists Association commended Texas Gov. Rick Perry for signing into law two significant pieces of legislation in support of Texas small business independent community pharmacies: HB 1358, legislation that provides common sense standards to pharmacy audits conducted by pharmacy benefit managers, and SB 1106, which provides transparency in generic maximum allowable costs, or MACs, for Medicaid plans.
With the governor’s signature, Texas becomes the 25th state to enact legislation intended to focus pharmacy audits on uncovering fraud and the fourth to enact MAC transparency.
"NCPA is extremely grateful for all of the hard work of everyone who brought this legislation to fruition, especially Michael Wright, executive director of the Texas Pharmacy Business Council, for his stellar leadership,” said B. Douglas Hoey, NCPA CEO. “With Gov. Perry’s signature, half of all states have recognized the challenges independent pharmacies face with PBM audits and the need for statutory standards. Additionally, Texas becomes the fourth state to ensure independent pharmacies receive some predictability in how they will be reimbursed for generic medications. For independent pharmacies, this is of great importance since 80% of the medications they dispense are generics.”
Hoey continued, “There are more than 1,500 small business independent community pharmacies in the state of Texas. These small businesses provide local jobs and add to the tax bases of their communities. Statistics show that for every dollar spent at a local small business, 68 cents of that remains in the community. This legislation ensures these revenues remain in the community and are not siphoned off by large out-of-state entities.”
Michael Wright added, “Thanks to the hard work of our pharmacists here in Texas, fair audit reform and MAC transparency have been enacted. This legislation allows our pharmacists to focus more attention on patient health and obtaining positive outcomes on their behalf rather than justifying minor clerical errors to the PBMs. This also provides a modicum of transparency in how pharmacies will be reimbursed for dispensing lower-cost generic medications. We are thankful to the legislature and to Gov. Perry for recognizing the necessity of these measures and enacting these common-sense reforms for small business independent pharmacies that many of our fellow Texans rely on for their healthcare needs.”
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Supreme Court issues ‘pay-for-delay’ ruling
NEW YORK — Patent settlements between brand and generic drug makers commonly referred to as "pay-for-delay" settlements are not necessarily against the law, the Supreme Court ruled Monday.
In a 5-3 ruling in the case of Federal Trade Commission v. Actavis — Samuel Alito did not take part in the case — the court ruled that courts reviewing such settlements should take a "rule of reason" approach rather than a "quick look" approach; the latter approach would presume that the settlements are unlawful, while the former holds that the plaintiff must prove they are on a case-by-case basis.
The high court also reversed the ruling by the U.S. Court of Appeals for the Eleventh Circuit, which had affirmed a lower court’s ruling granting drug maker Actavis’ motion to dismiss the FTC’s suit.
"We are pleased that the court rejected the FTC’s proposed ‘quick look’ test and did not rule that settlement agreements are presumptively unlawful," Actavis president and CEO Paul Bisaro said. "Rather, the court has established that the ‘rule of reason’ be applied and left it to the lower courts to determine if the benefits of the settlement outweigh harm to consumers."
The ruling means that the FTC can still challenge patent settlements between branded and generic drug companies, which have become controversial in recent years.
In a typical case, a generic drug maker will file an application with the Food and Drug Administration challenging the patent on a branded drug with the goal of becoming the first to market the generic. The branded drug’s manufacturer will respond with a patent-infringement lawsuit that will put an automatic stay of final FDA approval for up to two-and-a-half years. Rather than going to court, however, most cases are settled.
The settlements that become a problem for the FTC and many patient-advocacy groups are those in which the generic company agrees to hold off launch of the generic in exchange for a "reverse payment." The payment can involve money or a promise by the brand drug maker not to launch an "authorized generic" — essentially the branded drug marketed under its generic name at a discounted price, usually through a third-party company — and is called a "reverse payment" because it involves the patent holder paying the alleged infringer, rather than the other way around. Still, generic drug companies maintain that regardless of delays, the deals still get generic drugs into the hands of consumers months or years ahead of patent expiration, and that withholding launch beyond patent expiration would be illegal.
In the current case, Actavis predecessor Watson Pharmaceuticals entered a deal with Solvay Pharmaceuticals, now owned by AbbVie, in 2009, in which Watson, Par Pharmaceuticals and Paddock Labs agreed to delay launching generic versions of the topical testosterone ointment AndroGel for a share of profits on the drug. The FTC sued, alleging an antitrust violation.
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